Cottage industry best refers to the homemade production of manmade physical items for public sale. This rules out agriculture, household chores, do-it-yourself projects and hobbies–though much effort may be involved. Also excluded for now are products and services like those provided in banks, bars and restaurants, beauty salons, casinos, courtrooms, groceries, hospitals and schools. Before the Industrial Revolution’s advances in machinery and large-scale capital financing, most production was done at home.
A cottage industry is a small-scale, decentralized manufacturing business often operated out of a home rather than a purpose-built facility. Cottage industries are defined by the amount of investment required to start, as well as the number of people employed. They often focus on the production of labor-intensive goods but face a significant disadvantage when competing with factory-based manufacturers that mass-produce goods.